Branding - Financial Services Marketing

There are many vogue words tossed around to describe different aspects of this important concept. “Brand,” “image,” “corporate image,” “reputation,” “brand value,” “identity,” and “brand recognition” are some of them. Although one can quibble over precise definitions, in essence, all these words refer to the same concept.

Most marketers use the terms “positioning” and “branding” interchangeably. However, this discussion chooses to look at branding as a further refinement of positioning. Positioning defines a company or product in relation to its markets and competitors. Branding attempts to create a unique perception, an emotional or intellectual bond between product and end user. All companies and products are positioned (even if by default). Not all companies or products can be branded. As an example, Visa and MasterCard have similar positioning in the minds of their target markets: they are both perceived as mass-market, all-purpose credit cards, particularly when compared with American Express, which has a more upscale image. Most people perceive very little difference between them in terms of product features, pricing, or other tangible qualities. If you ask people which credit card they carry, some would have to look in their wallet to see if it was a Visa or MasterCard.

Nevertheless, Visa and MasterCard have very different brand images. These are elements that are tied to the company’s “vision, mission and values—the terms most often used to define the central building blocks for the brand.”

Advertising is not the only factor in creating a brand image, but a strong advertising campaign can certainly create a values-laden brand image. For consumers, the difference between Visa and MasterCard likely comes down to their tag lines: “Visa is everywhere you want to be” versus “Some things are priceless. For everything else there’s MasterCard.”

A strong brand image, like that of American Express, has monetary value; it is a quantifiable corporate asset. This is true for several reasons:

Brand image translates into profits because a branded product can command a higher price than an equivalent generic product. Many banks offer free travelers checks, but because American Express is a preferred brand name, it can command a premium.

A brand image provides a shorthand way of letting constituents know what to expect from the company. A brand image has a personality, and a perceived level of quality is associated with particular brands. Sales staff, recruiters, or investor-relations managers will have a far easier time getting an audience if their target markets are already familiar with the brand image. When an American Express account manager calls up a new prospect, it will be easier to get an appointment than if that same salesperson were representing an unknown company.

It is much cheaper to introduce a new product, or brand extension, if it is attached to a familiar brand name. An example of a “brand extension” is

OPEN: The Small Business Network from American Express. Most important of all, a brand name is unique. It is one characteristic of your product that cannot be copied by your competitors.

Not every product or company can be successfully branded. Traditionally, branding has been used for tangible consumer goods—soaps, soft drinks, cars. Very few financial services companies have widely known brand names. In a 2002 Harris Poll, not a single financial services company made the top 10 in “reputation quotient” and only three broke into the top 50: American Express, Merrill Lynch, and Citigroup. According to a Harris spokesperson, financial services companies “do not leave an emotional impact, which is typically key to a ranking of this nature.” This lack of brand recognition for most financial services companies in the United States is borne out by Fortune magazine’s “America’s 2004 Most Admired Companies” list, which includes only one financial services firm—American Express—among the top ten. Why is American Express a more recognizable name than other financial services firms? For one thing, American Express has had the same name since it was founded in 1850 and a consistent branding approach for most of that time. For another, AmEx has been a consistent advertiser and has had one of the longest- standing relationships with its advertising agency—Ogilvy & Mather—since the 1950s. It is probably no coincidence that the agency is a strong proponent of what it calls “360-degree branding.” This means that every piece of communication that passes among AmEx, its internal audience, and its clients contains the same tone and look, whether annual reports or product packaging, advertising or training manuals, websites or signage.

Very few brand strategies have had such consistency over such a long period. (Merrill Lynch, with its bull logo and “bullish on America” tag line going back to the early 1970s, is another rare example.) Part of the reason for the scarcity of recognizable financial brand names is simply that many notable brand names routinely disappear in mergers and acquisitions.

Creating a Brand Image For a new company or product, or one without a recognizable brand image, the starting point is the name. Naming can have an enormous impact on a business’s success or failure. For example, two companies that provided online trading for time. One was called Harborside, for no reason except that the founder liked boats. The other was called Liquidnet. While the name was not the only cess, making the nature of the company’s business In a crowded marketplace, a memorable name can stand out. In the competitive hedge fund area, some managers have attempted to stand out from the crowd with names like Pirate Capital and Grizzly alumni who were interested in investing.

After the name is settled, the next step in should be distinctive and easily recognizable. A logo can use a distinctive typeface, or it may have a visual Although large companies spend millions to get the right logo design, success in this area is primarily a matter of knowing your positioning and making sure the logo reflects it. When Chemical Bank took over Manufacturers Hanover Trust in 1991, it inherited a logo of a square with diagonal lines through it. It was referred to, internally at least, as a “tire tread”—not exactly the image the bank hoped to convey.

“Borrowing” a Brand Image Because it is so difficult to make a financial company stand out from its competitors, some companies have had success by associating with a better-known brand name. For example, many credit card companies “co-brand”—with airlines, car companies, online retailers like Amazon, and so forth. Customers may not remember whether they’re carrying a MasterCard or Visa, but they do remember they get points toward a new car or book every time they use it.

Co-branding helps promote both brands. First, the advertising dollars are multiplied with each additional marketer. Disney, Bank One, and Visa created a co-branded card—the Disney Visa Credit Card from Bank One—that all three support. Second, co-branding enables synergies, such as free publicity for Visa at Walt Disney World or Disney’s name appearing on Visa’s cards. There is also a “rub-off” effect, by which Bank One and Visa benefit from Disney’s distinctive brand identity. In fact, Disney’s identity was seen as so valuable that Visa paid an estimated $20 million in licensing fees.

The strategy of co-branding is not limited to the consumer marketer. Wall Street Access, a NYSE member firm, has targeted strategic alliances to help build the brand image. Because one of its programs offered mutual funds through banks, the company sought out and won the exclusive endorsement of the American Bankers Association—a backing that enabled the company to grow rapidly. Not all co-branding efforts work. Sometimes the target group isn’t appropriate, or the environment isn’t suitable to support a co-branded activity. E*Trade entered into a partnership with Target in which the online broker opened minibranches in Target stores. According to E*Trade’s president, Jarrett Lilien, “we were not able to make it into a profitable distribution channel.”

Other ways to “borrow” a brand image are to use well-known names in advertising and promotion. For example, MetLife licensed the Peanuts comic-strip characters to lend a “warm and fuzzy” feel to its product. Companies have tried, with varying degrees of success, to use celebrity endorsers.

Another way to create a brand image is to use real clients or executives. Charles Schwab & Co. built its advertising and its brand image around the figure of Charles Schwab. “Tombstone” ads, which announce completed deals, are examples of using real client names to bolster the image of the investment bank.

Supporting a Brand Image In maintaining a brand image, the most important quality is consistency. Both tangibles (such as brochures or premiums) and intangibles (such as commitment to quality) should conform to the brand image.

There must be consistency of message across all channels of communication, including these areas:

Management communications through public relations (talking to the press) and investor relations (talking to analysts)

Internal communications with employees, vendors, and investors

Company history and leadership

Brick-and-mortar look and feel (offices, signage)

Image projected by employees

Online image

Corporate identity system: use of name, logotype or symbol, color, and typography

In addition to consistency, brand management requires differentiating in a number of ways, such as unique product attributes/distinctiveness in market perception and appropriate sponsorships.

Figure Typical Identity Guidelines

Perhaps most important, maintaining the value of a brand image requires actively avoiding negative messages. It is not always possible to control negative messages, but there are ways to stack the odds in one’s favor:

Practice honest and proactive communications with all constituencies, including the press

Create proactive customer-satisfaction programs

Maintain company standards through employee recruitment and training

Create a positive workplace environment

Contribute through philanthropy and public service to build “reservoirs of goodwill” that will carry a good company through bad times.